Not everyone is looking to buy a home in today’s market, but the interest in refinancing a mortgage has peaked. One of the most important aspects to staying out of mortgage debt and keeping a manageable payment is the interest rate. Although rates are historically low, not everyone qualifies or will find obtaining a good rate to be easy. However, there are few ways to increase the odds of getting a good rate.
Keeping It Low
The most overlooked step in securing a great mortgage deal is checking one’s credit report. Too many people enter the mortgage application process without checking their score, only to find out their credit isn’t as good as they thought. A key steps is knowing your score and how this score measures up compared to lender expectations. Many lenders require scores above 750 for the best rates. If your score isn’t at 700 or better, you may want to take some time out to work on improving your score before applying for a mortgage loan.
It is also important to have your documentation ready when you enter the lender’s office. Have copies of your credit report, at least 6 months worth of paycheck stubs and the previous two years tax returns. This will enable the lender to get an idea of your financial situation without having to dig too far into your history. Remember that you don’t want your credit report information officially verified unless you are going forward with a loan, unnecessary checks to your credit report can be damaging. Having this information with you can allow the lender to give an estimate of what you can expect in terms of interest rates.
Just like any deal, mortgage lenders are different from one another and some may offer better loans than others. Shop around before you decide on a lender, but remember to take your financial information with you. Get at least three estimated mortgage loan offers from different lenders and compare the terms and conditions before you decide. Also, it isn’t all about the interest rate number, but the type as well. Stick to fixed interest rates over variable or adjusting, even if the actual rate is slightly higher.